The CFAR Upgrade: What Is It and Why Is It Important?

The coronavirus pandemic and the resulting upheaval of travel plans across the globe has thrust travel insurance into the spotlight of late. Many travelers have been disappointed or surprised to learn that funds lost due to trips canceled because of this pandemic are not covered by the travel insurance plan they bought. As a broker, the New York State Bar Association Insurance Program works with many of the top carriers in the industry, we know the trends well and plans offered by other carriers. Pretty much industry-wide, travel insurance plans do not offer coverage for events like this pandemic. Travel insurance plans are “inclusive,” meaning they cover the specific named perils that are listed within the policy. Any scenario or event outside of that list would generally not be covered.

So what’s a traveler to do when a global pandemic strikes without warning and ruins well-laid travel plans? Well, the first recourse is to go to your travel supplier (airline, tour operator, hotel, etc.) and look to get a refund from them. This has been the advice widely dispersed to travelers during this pandemic, and many, if not most (from our anecdotal experience), have reached a satisfactory resolution to their changed or canceled plans.

But what if you want your travel insurance plan to cover this type of scenario? The answer, my traveler friend, lies in a special upgrade offered on many plans called Cancel For Any Reason, or CFAR as it’s commonly referred to in the industry. CFAR is a benefit that is quite aptly named—travelers who have added this plan upgrade may cancel their trip for literally any reason at all. It does not need to be a covered reason listed in the policy. CFAR adds an extra layer of protection and flexibility to the discerning traveler seeking that security.

What’s the catch? Why doesn’t every traveler choose the CFAR upgrade?

CFAR does have conditions. And a cost. Here are the specifics you need to know about this coverage:

• CFAR is not offered on every insurance plan. For those plans that offer it, there’s a time-sensitive period for buying your plan in order for be eligible. For most plans, you must buy your travel insurance plan within 10-21 days of making your initial trip deposit in order to add the CFAR upgrade. If you buy your plan after that window has passed, you’re out of luck. (Some plans have a shorter or longer window – check your specific plan.)
• The CFAR upgrade generally costs 1.5- 1.60 times the amount of the standard insurance plan cost. For this reason, many travelers forego the option and choose the extra risk over the extra cost. It’s a matter of personal preference.
• While travelers with CFAR coverage won’t get a full payout for a trip if they choose to cancel, they will generally be reimbursed 70-75% of their pre-paid, non-refundable trip costs.
• If you do buy the CFAR upgrade and decide to use it, you generally must make your decision at least two days prior to your scheduled trip departure date. (Again, this depends on your plan, so check for specifics, but this timeframe is pretty standard.)
• To get the CFAR upgrade, you have to insure all of your pre-paid, non-refundable trip costs. So you can’t, for example, only buy insurance coverage for your airfare when you’re going on a trip that involves more expenses than this, such as lodging.
• CFAR is not available to residents in New York state (per state Department of Insurance regulations).

Cancel For Any Reason coverage may not be for everybody, but we’ve learned through talking to many customers that it may be more in demand than we thought. From customer stories and experience, we also believe interest in CFAR coverage will increase in the coming months and years as travelers step boldly back out into the world when restrictions are lifted. We hope this information answers some of your questions. If you have additional questions or would like to talk about coverage with one of our licensed customer service agents, please visit the New York State Bar Association Insurance Program online here or contact our licensed customer service agents at 1-800-727-7770, option 5. We look forward to helping you select the best coverage for your travel plans.

This content is written by and posted with permission from Travel Insurance Services, partner of the NYSBA Insurance Program.